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"In addition to significant job and economic impacts from energy production and its extensive supply chains, the growth of long-term, low-cost energy supplies is benefiting households and helping to revitalize U.S. manufacturing, creating a competitive advantage for U.S. industry and for the United States itself."

WASHINGTON--(BUSINESS WIRE)--The economic and employment contributions from U.S. unconventional oil
and gas production are now being felt throughout the U.S. economy,
increasing household incomes, boosting trade and contributing to a new
increase in U.S. competitiveness in the world economy, a new study by
IHS finds.

Unconventional oil and gas activity increased disposable income by an
average of $1,200 per U.S. household in 2012 as savings from lower
energy costs were passed along to consumers in the form of lower energy
bills as well as lower costs for all other goods and services. That
figure is expected to grow to just over $2,000 in 2015 and reach more
than $3,500 in 2025, the study says.

U.S. trade position will continue to improve, owing to the significant
reduction in energy imports and the increased global competiveness of
U.S.-based energy-intensive industries, the study says. Driven by a rise
in domestic production and manufacturing that will displace imports, as
well as a favorable export position for these industries, the trade
deficit will be reduced by more than $164 billion in 2020—equivalent to
one-third of the current U.S. trade deficit.

The new study, entitled America’s New Energy Future: The
Unconventional Oil and Gas Revolution and the Economy – Volume 3: A
Manufacturing Renaissance, builds on previous IHS research on the
economic contributions of unconventional oil and gas activity. The
previous studies focused solely on upstream unconventional activity and
found that that sector of the energy value chain currently supports more
than 1.7 million jobs and will grow to nearly 3 million by the end of
the decade.

The new study widens the breadth of the research to include the full
energy value chain (upstream, midstream and downstream energy and
energy-related chemicals) and the overall macroeconomic contributions on
the manufacturing sector and broader U.S. economy. Midstream and
downstream unconventional energy and energy-related chemicals activity
currently support nearly 377,000 jobs throughout the economy, the study
finds. Combined with upstream activity, the entire unconventional oil
and gas value chain currently supports more than 2.1 million jobs. Total
jobs supported by this value chain will rise to more than 3.3 million in
2020 and reach nearly 3.9 million by 2025, the study says.

“The unconventional oil and gas revolution is not only an energy story,
it is also a very big economic story that flows throughout the U.S.
economy in a way that is only now becoming apparent,” said Daniel
Yergin, IHS Vice Chairman and author of The Quest: Energy, Security
and the Remaking of the Modern World. “In addition to significant
job and economic impacts from energy production and its extensive supply
chains, the growth of long-term, low-cost energy supplies is benefiting
households and helping to revitalize U.S. manufacturing, creating a
competitive advantage for U.S. industry and for the United States
itself.”

Energy-related chemicals and other energy-intensive industries such as
petroleum refining, aluminum, glass, cement, and the food industry are
some of the primary beneficiaries from secure supplies of low-cost
energy from unconventional production, the study says. More than 70
percent of the cash cost of producing energy-related chemicals— which
include major commodity petrochemicals such as olefins, methanol and
ammonia—is the cost of raw materials and energy feedstocks.

The chemical manufacturing industry accounted for 13 percent of all U.S.
merchandise exports ($198 billion) in 2012—compared to $152 billion in
2007. This trend is expected to continue as energy-intensive industries
benefit from lower energy prices, lower electricity prices and increased
demand for their products as growth in investment spurs domestic
consumption, the study says.

In addition to measuring jobs supported by the full unconventional value
chain, the study also quantifies the additional manufacturing jobs
attributed to the broader macroeconomic contributions that begin with
unconventional oil and natural gas. More than 460,000 combined
manufacturing jobs (3.7 percent of all manufacturing jobs) will be
supported in 2020, rising to nearly 515,000 (4.2 percent of total
manufacturing jobs) in 2025. The manufacturing sector will become
increasingly connected to unconventional development as a primary source
to create and sustain jobs over the course of the study period.
Manufacturing jobs will represent one out of every eight jobs supported
by unconventional oil and gas development during that time, the study
says.

“This study illustrates the extended contributions of the unconventional
revolution to the U.S. economy as energy intensive industries move to
capitalize on this newfound abundance and the contribution to overall
competitiveness that it brings,” said John Larson, Vice President, IHS
Economics. “It puts the unconventional revolution in context as an
important, but little understood pocketbook issue for all Americans.”

Other Key Findings

The entire unconventional oil and gas value chain and energy-related
chemicals will contribute $284 billion in value-added contributions to
GDP in 2012, a figure that will increase to nearly $533 billion
annually in 2025.

The full value chain of industrial activity and employment associated
with unconventional oil and natural gas contributed more than $74
billion in federal and state government revenues in 2012. Tax receipts
will rise to more than $125 billion annually by 2020 and reach $138
billion by 2025.

Workers’ earnings from all unconventional energy and chemicals
activity were nearly $150 billion in 2012. This total will rise to
$207 billion in 2015 and will be nearly $269 billion in 2025.

Industrial production increases directly resulting from lower
feedstock prices and energy costs associated with the full value chain
of unconventional activity will be $258 billion (3.5 percent increase)
by 2020 and rise to $328 billion (3.9 percent increase) in 2025.

Between 2012 and 2025, IHS projects a cumulative investment of nearly
$346 billion across the midstream and downstream energy and
energy-related chemicals value chains. Close to $216 million of this
will come in the midstream and downstream segments of the
unconventional value chain, including 47,000 miles of new or modified
pipeline infrastructure.

More than $31 billion in new capital investments will drive the
addition of more than 16 million tons of chemical capacity by 2016.
Cumulative investment will grow to more than $129 billion to support
nearly 89 million tons of capacity by 2025.

Employment contributions from the midstream and downstream sector are
at their greatest in the near term (currently supporting nearly
324,000 jobs), as expansions and other capital expenditures are made
to increase capacity connecting the resource base with broader
end-users.

Energy-related chemicals (currently supporting more than 53,000 jobs)
will support a growing number of jobs in the long term. By the end of
the decade, energy-related chemicals will support more than 277,000
jobs—a fivefold increase—and rise to nearly 319,000 by 2025.

America's New Energy Future also includes a Low Production Case which
measures the potential loss of economic contributions from a more
restrictive regulatory environment than currently exists today. The
results of this Low Production Case include:

1.4 million less jobs supported by 2015 than otherwise expected.
Nearly 2.8 million less by 2025.

$127 billion less in value-added contributions to U.S. GDP in 2015 and
$300 billion less by 2025.

$29 billion less in federal and state revenues in 2015. The loss would
grow to $72 billion by 2025. The cumulative loss for federal and state
revenues over the entire 2012-2025 study period would be nearly $535
billion.

The benefit to U.S. trade position would be reduced to $94 billion --
57 percent of what is currently expected.

On average, disposable income per household would be $1,730 less per
year than is otherwise expected.

“The availability of a long-term supply of low-cost feedstock derived
from unconventional resources is revitalizing the petrochemical industry
in North America,” said Mark Wegenka, Managing Director, Chemical
Consulting at IHS, and a contributing author of the study. “Prior to the
recent expansion of unconventional gas, the outlook for the industry was
bleak—it was suffering from significant plant shut-downs and capacity
reductions. However, as a result of these unconventional oil and gas
supplies, we’ve witnessed a complete turnaround. The industry is not
only competitiveagain, but it is attracting significant domestic
and foreign investment and adding capacity that is resulting in more
high-quality U.S. jobs that pay well.”

About The Report

America’s New Energy Future: The Unconventional Oil and Gas
Revolution and the U.S. Economy is a three-volume series based on
IHS analyses of each play, which calculates the investment of capital,
labor and other inputs required to produce these hydrocarbons. The
economic contributions of these investments are then calculated using
the proprietary IHS economic contribution assessment and macroeconomic
models to generate the contributions to employment, GDP growth, labor
income and tax revenues that will result from the higher level of
unconventional oil and natural gas development. This research was
supported by the American Chemistry Council, America’s Natural Gas
Alliance, the American Petroleum Institute, the Fertilizer Institute,
the U.S. Chamber of Commerce – Institute for 21st Century
Energy, the National Association of Manufacturers, the Natural Gas
Supply Association, Rio Tinto and the Society of the Plastics Industry.
IHS is exclusively responsible for all of the analysis and content.

Note: The “full value chain” refers to the entire range of
economic activity that begins with the development of oil and gas
production (upstream), flows into the transportation of these resources
(midstream), and then into their transformation into products
(downstream) and then into industrial uses, such as the production of
petrochemicals.

IHS (NYSE: IHS) is the leading source of information, insight and
analytics in critical areas that shape today’s business landscape.
Businesses and governments in more than 165 countries around the globe
rely on the comprehensive content, expert independent analysis and
flexible delivery methods of IHS to make high-impact decisions and
develop strategies with speed and confidence. IHS has been in business
since 1959 and became a publicly traded company on the New York Stock
Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is
committed to sustainable, profitable growth and employs approximately
8,000 people in 31 countries around the world.